Military Housing: Continued Concerns in Implementing the Privatization Initiative
NSIAD-00-71
Published: Mar 30, 2000. Publicly Released: Mar 30, 2000.
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Highlights
Pursuant to a legislative requirement, GAO provided information on the Department of Defense's (DOD) Military Housing Privatization Initiative, focusing on the: (1) status of the housing privatization initiative; (2) accuracy of the services' life-cycle cost analyses comparing the cost of proposed privatization projects to comparable projects financed through military construction funds; and (3) progress DOD is making in coordinating and integrating the initiative with other family housing programs.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | As part of the development of the DOD integrated housing strategy and in view of the potential impacts from the new housing allowance initiative, the Secretary of Defense should: (1) require that housing requirements assessments be updated as part of the approval process for proposed privatization projects; and (2) clarify DOD's policy that requires primary reliance on private sector housing to specifically delineate the circumstances under which privatization or military construction projects are permissible when alternative housing is available in local communities. |
Closed – Implemented
According to DOD, it has begun integration of the MILCON and privatization program with the housing allowance and housing requirements determination processes. The Department also plans to address current service housing assignment and construction standards in a coordinated fashion. DOD has been working to achieve consistency in the methodologies needed to determine these requirements through ongoing studies and senior working groups. For example, DOD has established a senior-level joint Housing Policy Panel to provide guidance for determining housing requirements and to establish clear policy for meeting these requirements. DOD plans no further action.
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| Department of Defense | To help evaluate the overall effectiveness of the Military Housing Privatization Initiative, the Secretary of Defense should direct the Competitive Sourcing and Privatization Office to develop a privatization evaluation plan. The plan, which should be used by all services to ensure consistency, should include performance measures to help officials determine whether the initiative is meeting goals and whether modifications to the initiative are needed. The plan should also provide a means to evaluate the merits of the individual authorities, compare the actual and estimated costs of each project, assess key aspects of developer performance, collect statistics on the use of the housing, and assess servicemembers' satisfaction with the housing. |
Closed – Implemented
In response to our recommendation, DOD initiated a formal evaluation plan. The evaluation plan includes detailed performance data on each project that has been signed. The information is collected and updated on a semi-annual basis. The first report showed the status of the program as of December 31, 2000. DOD officials have testified that the evaluation plan is a key tool in evaluating the benefits of the program, identifying best practices, and implementing program improvements.
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| Department of Defense | To increase the reliability and consistency of life-cycle cost analyses and to provide specific criteria for approving privatization projects, the Secretary of Defense should: (1) refine the draft guidance on preparing life-cycle cost analyses to clearly specify what costs should be included in the analyses and to better explain how the services should estimate each type of cost; and (2) develop definitive guidance for approving a privatization project when the project's estimated total costs exceed the costs to implement the project with military construction funds. |
Closed – Implemented
Draft guidance on the methodology for computing life cycle cost has been used to evaluate all projects presented to DOD for concept approval since January 1999. According to DOD, refined guidance incorporating GAO's recommendations to require the services to examine the privatization and MILCON alternatives and their associated costs in a uniform and comprehensive manner will be coordinated with the services in late spring 2000. As of August 2001, draft guidance has been revised but is still in draft form. Currently, DOD does not have a firm date for finalizing the guidance. The draft guidance does not address circumstances under which projects can be approved when the privatization alternative costs more than the MILCON alternative.
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Topics
Cost analysisHousing allowancesHousing constructionHousing programsLife cycle costsMilitary cost controlMilitary housingPrivatizationRental housingMilitary forces